Land rent

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Land rent

Apr 9, 2017 | 07:34 1 Just wondering I have a landlord who wants some way to rent his land out yet keep farming status write offs looking for ideas thank you Reply With Quote
Apr 9, 2017 | 07:42 2 We do it for one guy. Based on $/Ac. But sell grain in his name before year end. Not sure how it works for him with expenses or anything? Reply With Quote
Apr 9, 2017 | 08:00 3 We did this for three years it was a 60-40 split, with him paying his share of fert and chem bill Basically any grain sold was into his name, he would then give us a cheque for our share under custom work, say custom seeding. That way he could right it off. At the end we had trouble thinking of thinking of custom work ideas. I guess I even did some custom rock picking, and no I retired from that so no one call for rates. LOL Reply With Quote
Apr 9, 2017 | 08:09 4 If he wants 60 cash rent pay him 120 in the form of grain hauled to the elevator in his name, he pays you back 60 the next day for custom farming. Net 60 cash rent and he is still a farmer. Reply With Quote
Apr 9, 2017 | 08:10 5
Quote Originally Posted by bgmb View Post
If he wants 60 cash rent pay him 120 in the form of grain hauled to the elevator in his name, he pays you back 60 the next day for custom farming. Net 60 cash rent and he is still a farmer.
Might have to float the 60 up and down a bit from year to year to make it look like he has some variability. Reply With Quote
Apr 9, 2017 | 08:25 6 I'd tell him to keep farming it himself then.
Good way to get in trouble with tax man. Reply With Quote
Apr 9, 2017 | 08:42 7
Quote Originally Posted by jake550 View Post
I'd tell him to keep farming it himself then.
Exactly. Reply With Quote
Apr 9, 2017 | 08:50 8 Little off topic, some land sold about and hr and a bit of me for $400,000/quarter was a 9 mill transaction. One large farm bought it. There would be no thought of keeping my status as a farmer if I was offered that. The land is far from "elite" but got huge $$$$. Reply With Quote
Apr 9, 2017 | 08:57 9 As long as he shows $10,000 farming income and some farming expenses he is a small farmer. Not all farmers are big farmers. He can just scale back - you could custom farm a piece for him. Lots of guys just keep a bit to stay in the game. Tax man doesn't care. This is still a free country and we can do what we like. Reply With Quote
farmaholic's Avatar Apr 9, 2017 | 09:02 10 "Elite" is a word I've never heard used to describe land quality...is there such a beast? ...not here in the slum of the Ghetto.

What's with the farming status thing? Only save tax on diesel now. Bit of a saving on farm location vehicle registration (in sask anyway???). Is there really anything else I'm missing? Reply With Quote
Apr 9, 2017 | 09:02 11
Quote Originally Posted by sumdumguy View Post
As long as he shows $10,000 farming income and some farming expenses he is a small farmer. Not all farmers are big farmers. He can just scale back - you could custom farm a piece for him. Lots of guys just keep a bit to stay in the game. Tax man doesn't care. This is still a free country and we can do what we like.
You tell him sumdum we all support you. Maybe we can all sit back and smoke up after you give him your piece of mind. LOL Reply With Quote
Apr 9, 2017 | 09:22 12 Yep Bigzee, our Agriville reunion could be memorable. Reply With Quote
Apr 9, 2017 | 09:35 13
Quote Originally Posted by sumdumguy View Post
Yep Bigzee, our Agriville reunion could be memorable.
When are you guys going to start seeding?
I hope to start end of month, she's pretty wet in places this wind has really helped though. Reply With Quote
Apr 9, 2017 | 09:41 14 I believe as long as they have skin in the game they can carry on farming status. For example crop share or some kind of variable cash rent based on production. He should talk to his accountant to confirm. Reply With Quote
Apr 9, 2017 | 09:45 15
Quote Originally Posted by farmaholic View Post
"Elite" is a word I've never heard used to describe land quality...is there such a beast? ...not here in the slum of the Ghetto.

What's with the farming status thing? Only save tax on diesel now. Bit of a saving on farm location vehicle registration (in sask anyway???). Is there really anything else I'm missing?
some gst back I guess? I think power rates a little cheaper , etc.

we farm a few quarters of that elite land , supposedly best in Sask., but 42 " rain ,well, it really doesn't matter, lol Reply With Quote
blackpowder's Avatar Apr 9, 2017 | 09:46 16 Many reasons out there. No clue what would pass close inspection. Over the years saw a lot of different combos.
And bs and hassle. No one was audited so I dunno. Today, rule of thumb, if Ll has tax problems or multiple income streams, we sell grain in their name. Cash Lls seem to be the ones who survived never leaving the farm. See the pattern?

Who knows where capital gain rules are going? Farmer status always seemed a little sadistic to me anyway.

Here, #cos have farm land rental income taxed at 46%. Reply With Quote
Apr 9, 2017 | 11:00 17 Gotta agree with 550. If he wants farmer status, keep farming himself. If he wants rent, then cash rent. Unless you are taking the risk and doing the work, you are not a farmer.
We did this 'custom work' rent bs for a guy once. Was not worth the hassle. And the very few breaks we do get as primary producers are more difficult to justify if they get abused. Reply With Quote
Apr 9, 2017 | 11:09 18
Quote Originally Posted by Quadtrack View Post
Gotta agree with 550. If he wants farmer status, keep farming himself. If he wants rent, then cash rent. Unless you are taking the risk and doing the work, you are not a farmer.
We did this 'custom work' rent bs for a guy once. Was not worth the hassle. And the very few breaks we do get as primary producers are more difficult to justify if they get abused.
Totally agree, but lots of ppl do it. Can be a win win in certain situations. Sometimes a guy needs to keep farming for a few years to sell of grain and machinery Reply With Quote
Apr 9, 2017 | 11:33 19 If you retire but cash rent your land, if you haven't used up your capital gains exemption then the cra still calls you a farmer. Not really your choice. Reply With Quote
Apr 9, 2017 | 13:05 20 I don't know if CRA has changed their stance on capital gains exemption, but in the past the capital gains exemption on your farm sale only applied to farmer and spouse who were farmers, so if you cash rented you may not qualify. Best to check with an accountant on that matter for sure. Reply With Quote
Apr 9, 2017 | 15:05 21
Quote Originally Posted by sumdumguy View Post
I don't know if CRA has changed their stance on capital gains exemption, but in the past the capital gains exemption on your farm sale only applied to farmer and spouse who were farmers, so if you cash rented you may not qualify. Best to check with an accountant on that matter for sure.
If you retire and cash rent your corporate owned land to non family get ready for a massive tax bill unless you can keep farming on paper Reply With Quote
Apr 9, 2017 | 15:42 22 Bgmb

Its actually more or less the same tax at the end of the day. With corporate land you would have take enough dividends so that if flows through to the shareholders.

leaving it in the company would cause high rate tax (46.6%) initially until someday when you pay dividends out.

In my opinion, if they want to remain a farmer keep farming. I would never entertain an arrangement unless the retired farmer was maybe going to work my operation for a T4's wage. That way he would see the costs and maybe put effort in the working for me.

My two cents are as follows:

In one post, the $120,000 and $60,000 would not qualify as an eligible farmer as the crop produced doesn't vary or show risk. Just because someone is doing doesn't make it right.

If a farmer wishes to go here then all of the production off the land would need to be reported on the landowners name. He then in turn has the be invoiced the applicable direct costs plus the custom rates for the service. Reply With Quote
Apr 9, 2017 | 16:23 23 just remember that farm insurance policies frown on custom work and DOT doesn't like you hauling someone elses grain on a farm plate. Reply With Quote
Apr 9, 2017 | 17:14 24
Quote Originally Posted by Richard5 View Post
Bgmb

Its actually more or less the same tax at the end of the day. With corporate land you would have take enough dividends so that if flows through to the shareholders.

leaving it in the company would cause high rate tax (46.6%) initially until someday when you pay dividends out.

In my opinion, if they want to remain a farmer keep farming. I would never entertain an arrangement unless the retired farmer was maybe going to work my operation for a T4's wage. That way he would see the costs and maybe put effort in the working for me.

My two cents are as follows:

In one post, the $120,000 and $60,000 would not qualify as an eligible farmer as the crop produced doesn't vary or show risk. Just because someone is doing doesn't make it right.

If a farmer wishes to go here then all of the production off the land would need to be reported on the landowners name. He then in turn has the be invoiced the applicable direct costs plus the custom rates for the service.
Grey area. If you have costs and you are selling grain and have some variability in my mind you are a farmer I think that would be legit. Reply With Quote
Partners's Avatar Apr 9, 2017 | 17:54 25 The big thing for farm status was the cheaper fuel..now that is gonzo.. Reply With Quote
Apr 10, 2017 | 13:19 26 If land is $180,000/150Ac cultivated, what should cash rent be? I'm thinkin' around $60./Ac


Does that sound, too low? too high? about right? Reply With Quote
Apr 10, 2017 | 21:23 27
Quote Originally Posted by danny W1M View Post
If land is $180,000/150Ac cultivated, what should cash rent be? I'm thinkin' around $60./Ac


Does that sound, too low? too high? about right?
In mb land rent is 2-3 percent of value pretty. Sask might be a bit higher? Reply With Quote
blackpowder's Avatar Apr 10, 2017 | 21:30 28 Its pushing 2-3% here but I dont believe long term sustainable based on $4500/ac land. Reply With Quote
farmaholic's Avatar Apr 10, 2017 | 22:18 29 $4500/ac? $720,000/quarter? 3% is $135/ac. If you wanted to buy some, what could you possibly grow to make payments on that. And I thought things were stupid here! WTF...is it in the golden horseshoe of Alberta? Long past agricultural value. I guess everything is relative....and that's relatively crazy!

...farming little league here in the slum of the Ghetto, and only growing sour grapes! For my bitter whine. Reply With Quote
Apr 10, 2017 | 22:41 30 % of land value is shit. It has to be % of crop potential. Land here (Lacombe, Blackfalds) is/has traded in the 6500-8000/ac range. 1/2 section a mile west with no residence and old 40 year old wooden bins and an aircraft hanger (older) and runway went for 1.2 million, each quarter.
These numbers are based on needing land for manure spreading, or development potential not farming income.
% doesn't work. Reply With Quote